Property update - March 2014

26 March 2014

Our real estate experts bring you the latest property law issues. Read their comment on these issues and take note of any action points that will help you and your organisation.

  • Easements - can a right to emit sound waves across another person's land constitute an easement, and can it be acquired by prescription? The Supreme Court has decided "yes" in relation to both issues.
  • Injunctive relief - where a property owner's enjoyment of his land is interfered with, should a court grant an injunction to prevent the continuation of that interference, or may it award damages in lieu?
  • Tenancy at will - the Court of Appeal has overturned a High Court decision that a tenant, which remained in occupation of commercial premises after its contracted out lease had expired, did so on the basis of an implied annual periodic tenancy. Instead, says the Court of Appeal, it was a tenancy at will.
  • CRAR - the "headlines", in anticipation of the introduction of the new rules on 6 April 2014.
  • Section 30(1)(c) LTA 1954 - a rare case involving the refusal of a landlord to grant a renewal lease because the relationship between the parties had irretrievably broken down.
  • Foreseeable harm - is there a duty on property professionals to take action in order to prevent foreseeable harm in a situation where there is no relationship of proximity between the professional and the party at risk of loss or injury.
  • Planning - the new Planning Court, revised planning guidance, restated green belt policy, and what constitutes a screening opinion.

Easements - can a right to emit sound waves across another person's land constitute an easement, and can it be acquired by prescription? The Supreme Court has decided "yes" in relation to both issues.

Key points

  • Strange as it may seem, the emission of noise - even intermittently and at differing volumes - can be acquired as a property right.
  • If those emissions constitute a nuisance, but the noise continues unchallenged for 20 years or more, an easement to make that noise will be acquired by prescription. This means it will no longer be open to challenge, at least not as a matter of private land law between landowners.
  • The existence of planning permission in relation to the activity which causes the nuisance can be taken into account by the court when considering the character of the locality in which the aggrieved owner and defendant have their properties.

Background

A prescriptive easement can arise in three ways: under the Prescription Act 1832, the doctrine of lost modern grant, or the archaic and little-used common law rule of prescription which deems there to have been continuous use since 1189. The case of Coventry and others v Lawrence and another involved a claim under the Prescription Act 1832.

Mr Coventry and others ran (and still run) a business in the Suffolk countryside, near the market town of Mildenhall. Over the years, planning permissions had been granted for the use of former agricultural land for:

  1. speedway racing, stock car and banger racing in a specially-constructed stadium, and
  2. a motocross track.

Clearly, all of these activities can create significant amounts of noise on race or practice days.

Some of the planning permissions were limited in duration. Others were personal to the then landowner, Terence Waters. And some set conditions, such as the number of events which could be held each year, the time of day when events could take place, and the maximum decibel level which could emanate from the site.

The speedway stadium was constructed in 1976, and speedway motorcycle races began immediately. Stock car and banger racing started in 1984, and greyhound racing in 1992. The motocross track was constructed in 1992 and was again used immediately.

In January 2006 Ms Lawrence and Mr Shields bought a house from a couple who had lived in it for the last 22 years, since 1984. The house is approximately half a mile from the motocross track and a third of a mile from the stadium. The buyers - the claimants in this case - were unaware of the existence of the track and the stadium.

After three months or so, they became concerned about the noise emanating from the motocross events on the track, and complained to the local authority. The council subsequently served noise abatement notices, in compliance with which attenuation works were - eventually - carried out. The council was happy with those works and took no further action. The works reduced the noise generated by the motorbikes and other vehicles, and by public address systems on race days etc, but of course did not eliminate it.

The claimants therefore pursued their claim that the use of both the stadium and the track constituted a nuisance, in breach of the private law of tort. In early 2008, they applied for an injunction to restrain the nuisance, and continued with the claim even after the attenuation works had been carried out. The respondents - the stadium operator, Mr Coventry; the company which operated the activities on the track; Mr Waters, and his son who was by then a joint owner of the land - and others involved in the first instance claim denied nuisance.

The High Court gave its judgment in March 2011, and held that a nuisance was being caused by reason of the noise. The judge decided that it was not possible to acquire a right to create what would otherwise have been a nuisance by noise and that, even if it was possible, there had been a couple of years in the early 1990s when neither the track nor the stadium was used, which interrupted the "clock ticking" for the requisite 20 years' use. He held that this would be fatal to a claim for a prescriptive right.

The judge awarded an injunction, preventing the continuation of the nuisance, but it was suspended for so long as the claimants' house remained unoccupied (Ms Lawrence and Mr Shields had moved out in April 2010, following extensive fire damage). The injunction did not stop the stadium and track being used entirely, but it limited the number of occasions when there could be emissions of noise, and the decibel levels which were allowed to reach the boundary of the claimants' property.

In reaching those conclusions, the judge raised the question of whether he could take into account the existence of the various planning permissions when assessing what was the "character of the locality". The need to consider this "character" stems from the infamous phrase in the 1879 case of Sturges v Bridgman: "what would be a nuisance in Belgrave Square would not necessarily be so in Bermondsey". That is to say, whether a particular activity causes a nuisance can depend on an assessment of the locality in which the activity is being carried out.

Despite raising the question of whether the planning permissions could be taken into account, the judge in the High Court did not directly answer it. However, in the words of the Supreme Court, "he appears to have held that the answer was no".

In all, the defendants lost in the High Court and therefore appealed. The Court of Appeal reversed the decision and held that the claimants had failed to establish that the use of the track and the stadium constituted a nuisance. It also said that the planning permissions could be taken into account when assessing the character of the locality for the purpose of determining whether an activity constitutes a nuisance. And Lewison LJ, although not asked to consider the question, opined that it is possible to obtain a right, by prescription, to do something which would otherwise be an actionable nuisance.

It was now the claimants' turn to appeal.

The decision of the Supreme Court

Lord Neuberger, President of the Supreme Court and a property lawyer by background, gave the leading judgment. In summary:

  • The right to commit a nuisance by noise can be (a) an easement, and (b) acquired by prescription. The technical description of the right is as a positive easement, permitting the transmission of sound waves from the dominant tenement over the servient tenement.
  • Such an easement can be acquired even where the emissions are not continuous, and instead vary in terms of volume (decibels) and frequency (how often).
  • On the facts of this case, however, the nuisance caused by unlawful activities on the site had not been carried out for the 20 year period immediately before the claim was brought in the courts, which is the end date of the period required to establish an easement by prescription. While noise had been emanating from the site since 1976, it had been at a level that was lawful for many of those years. It is only unlawful activities which will cause the 20 year clock to start ticking. On the facts, the unlawful use had gone on for only 16 years: the previous occupiers of the property had first complained to the council in 1992, 16 years before the proceedings were first brought in 2008.
  • Had there been 20 years' use, the two year hiatus, when no racing took place, would not - of itself - have been fatal.
  • Because a nuisance was being caused, and it had not gone on for long enough to become an easement by prescription, it remained open to challenge as a matter of private law between individual landowners.
  • It was not a defence to say that the claimants "came to the nuisance". In the same way that an easement is a property right, so is the right to claim that a nuisance is being caused which interferes with the use and enjoyment of the claimant's land. The right to complain - and the suffering of the nuisance - was already underway during the previous owners' occupation of the house. It did not matter that the claimants arrived on the scene only after the stadium had been up and running for some time. They continued to use the house in the same way that it was used by the previous occupiers. If they had changed that use, then a defence might have been available; but they had not.
  • The existence of planning permission for the use complained about - and the terms of that permission - can be a relevant consideration in a nuisance claim. The extent to which they will be useful to either party and the weight the court will attach to them will - as ever - depend on the surrounding facts and circumstances of each individual case.
  • The lawful implementation of planning permission can change the character of the locality. Any unlawful element of use will, however, be ignored.

The other four judges gave further comments on the case and the above points. In a few respects, they disagreed with Lord Neuberger. For example, in relation to the last point above, Lord Carnwarth felt that any activity could be taken into account - lawful or otherwise - if it was "part of the established pattern of use" of the local area.

But all four ultimately agreed with the outcome: there was an actionable nuisance because no easement to make the noise had been created by the passage of sufficient time.

The next step was for the court to consider the question of remedies: should an injunction be granted, or would an award of damages suffice? This is the subject of a separate article below.

Points to consider

The decision has generally been viewed as a welcome modernisation of the law of nuisance, especially in relation to interference with enjoyment of land which, as a type of nuisance, has not been considered by the upper courts for a considerable time. Some commentators see it as bringing up to date an area of law which had not kept pace with the realities of modern life, industrialisation, development, etc.

Particularly in light of the outcome on the question of remedy, it is being viewed as a judgment which is developer-friendly, or friendly towards those people and businesses which carry on activities which are inherently noisy or noxious, or which produce dust, vibrations or smells. The possibility of an easement arising by prescription - rendering these activities equally lawful - is also covered by this decision.

The above analysis was written by Cassandra Cartwright, associate in our Real Estate group.

Injunctive relief - where a property owner's enjoyment of his land is interfered with, should a court grant an injunction to prevent the continuation of that interference, or may it award damages in lieu?

Key points

  • Where a property owner's rights are being interfered with, the starting point has historically been that a court should award an injunction to prevent the wrongdoer from continuing to cause the nuisance.
  • The Supreme Court has now stated that, in its view, courts have been too ready to grant injunctions in recent years. The courts should now be more willing to consider an award of damages in lieu of an injunction, especially where there are wider "public policy" issues involved (eg, local employment that would be lost if a factory were shut down).

Background

This article follows on from the previous entry in this month's property update because it arises out of the same case, the Supreme Court's decision in Coventry and others v Lawrence and another. Having decided that there could be such a thing as an easement to emit noise, and that the planning history of the "dominant" site could be taken into account, the Supreme Court went on to consider what the remedy to the complainants should be. Would an injunction be ordered, requiring the speedway stadium and the motocross track to be used in a different, more limited way, or would a payment of damages to Ms Lawrence and Mr Shields suffice instead?

Discretion

As mentioned in the first article, the Supreme Court held that no right to make noise had actually arisen by prescription in this case because the unlawful element of the use had not been going on for the necessary 20 year period. Therefore there was an actionable nuisance. How should this be dealt with in terms of compensating the owners for the nuisance they had suffered, and would potentially continue to suffer?

Where a property right is being interfered with, the starting position was - and remains, despite this judgment - that the claimant is entitled to an injunction. It is not for the claimant to show why they should get an injunction; the defendant bears the burden of showing why the claimant should not get one.

However, Lord Neuberger went to some lengths to ensure that the courts, and parties to future cases, remember that an injunction is ultimately an equitable remedy, available at the discretion of the court; it is not a legal remedy, available as of right. The discretionary nature allows a court to take into account whatever matters it deems appropriate in the particular case before it.

In nuisance claims, the 1895 Court of Appeal decision in Shelfer v City of London Electric Lighting Company is often raised in argument. It is cited (usually by the defendant) as authority for the proposition that a claimant should not be entitled to an injunction where:

  • The injury to the claimant's legal rights is small.
  • It is capable of being estimated in money.
  • It can be adequately compensated by a small money payment.
  • It would be oppressive to the developer to grant an injunction.

However, the courts do not like to be seen to sanction the wrongdoing of the defendant by awarding damages, and allowing the nuisance to continue. Even in Shelfer itself, the judge did not want the Court of Chancery to be allowing "a wrong to continue simply because the wrongdoer is able and willing to pay for the injury he may inflict. ... [This is not] a tribunal for legalising wrongful acts".

The majority of recent cases in this area of law have been in relation to rights of light claims, where a development has interfered with the light received by neighbouring properties. The trend has been to award damages instead of an injunction only in exceptional circumstances.

For example, in the 2010 case of HKRUK II (CHC) Limited v Heaney, a developer was required by the High Court to take down part of the top two storeys of a building, even though some of the space had already been let to a tenant. There was a similar outcome in the 2007 case of Regan v Paul Properties Ltd and another, which was heard by the Court of Appeal.

The decision of the Supreme Court in Coventry v Lawrence

Lord Neuberger confirmed that, where a claimant has established that the defendant's activities constitute a nuisance, the claimant is - on the face of it - entitled to an injunction to restrain the future commission of the nuisance (in addition to damages for past nuisance). The precise form of the injunction awarded in any particular case will depend on the facts.

The Supreme Court, accordingly, restored the injunction originally imposed by the High Court. The judge there had heard much evidence as to the noise pollution and had had the opportunity to cross-examine witnesses. The Supreme Court felt he was the person best placed to determine the terms of the injunction. The injunction does not prohibit all forms of activity in the stadium or on the motocross track; instead, it sets certain hours of use, the number of times race meetings may be held each year, noise levels which must be adhered to, etc.

However, the Supreme Court also allowed the defendants to seek an order of the High Court by which damages could be awarded in substitution for the injunction. This was because the defendant's request for damages to be awarded as the appropriate form of relief was only raised, for the first time, in the Supreme Court. The High Court had therefore not had the opportunity to consider awarding damages in lieu. A calculation of damages had been made in the High Court, but these were compensation for the nuisance already suffered. They did not relate to the future position of the parties.

In approaching the question of whether to replace the injunction with an award of damages, the High Court will no doubt take into account the views expressed by their Lordships in this case.

But this was another area in which the members of the Supreme Court were not entirely as one. It will be interesting to see whether, for example, the judge decides to take up Lord Sumption's suggestion that:

"[t]here is much to be said for the view that damages are ordinarily an adequate remedy for nuisance, and that an injunction should not usually be granted in a case where it is likely that conflicting interests are engaged other than the parties' interests. In particular, it may well be that an injunction should, as a matter of principle, not be granted in a case where a use of land, to which objection is taken, requires - and has received - planning permission".

The other judges did not go quite so far when it came to the existence of planning permission, or the influence on a case of the public benefit of a particular use. For now, these remain merely factors for a court to consider, but it is certainly of note that public interest is a relevant factor that could be taken into account.

That said, the Supreme Court has chosen not to lay down any hard and fast rules as to what factors should or should not be taken into account, or the weight to be given to them, when considering the remedy for a nuisance. It notes that each case will be highly fact-specific, meaning that each court should be unfettered in its ability to weigh up the competing factors, and to decide on the appropriate remedy in any particular situation.

Whether or not the weight of any particular factor - including the public interest - is sufficient to justify the refusal of an injunction will be for the court to decide in the case before it. To quote again from Lord Neuberger:

"The fact that a defendant's business may have to shut down if an injunction is granted should ... obviously be a relevant fact. ... It is also right to mention planning permission in this context. In some cases, the grant of planning permission for a particular activity (whether carried on at the claimant's or the defendant's premises) may provide strong support for the contention that the activity is of benefit to the public, which would be relevant to the question of whether or not to grant an injunction".

However, even in such cases, the court dealing with the claim will have to weigh up all of the competing factors in reaching its decision.

The Supreme Court's decision has made one thing particularly clear: it is not for a court to "slavishly" follow the Shelfer principles. The power to award damages in lieu of an injunction has been available to the courts since 1858 (by the introduction of Lord Cairns' Act) and the question of whether damages will suffice should be given full consideration - whether the four Shelfer criteria are satisfied or not.

Measure of damages in lieu of an injunction

If there is going to be an award of damages in lieu of an injunction, in what amount should it be? It was on this question, more than any others raised by the case, that their Lordships' opinions differed. Ultimately, Lord Neuberger said they would leave this issue to one side, as they had not actually been asked to make a ruling on it.

He noted that the starting point, when assessing the damages to be awarded in lieu of an injunction, is normally based on the diminution in value to the claimant's property arising out of the continued nuisance. However, he went on to say that the damages might "... also include the loss of the claimant's ability to enforce her rights, which may often be assessed by reference to the benefit to the defendant of not suffering an injunction".

In other words, Lord Neuberger recognised that - in some circumstances - damages could be calculated not by reference to the claimant's losses but by reference to the defendant's gains. Such damages would perhaps be appropriate in a case where the claimant had not actually suffered any loss, but the court still felt compelled to penalise the wrongdoer. This is known as the buy-out principle, and was considered in an alert of June 2012.

Some of their Lordships went further. Perhaps this very point will be looked at when the case goes back to the lower court for consideration of whether the injunction will be replaced by damages.

Points to consider

The Supreme Court felt that "the opportunity should be taken to signal a move away from the strict criteria derived from Shelfer". It has also confirmed that public issues, beyond the private rights of the parties, may be taken into account. This has led some commentators to refer to the decision as driving the proverbial coach and horses through Shelfer. It remains to be seen whether this is an over-reaction.

However, the sheer fact that the Supreme Court has begun a shift away from a principle that has been with us for almost 120 years is indeed radical. In Lord Neuberger's words, the Supreme Court judges "are changing the practice of the courts".

As with all neighbour disputes, it is best if the parties can reach agreement without recourse to the courts. The time and costs involved often do not reflect the value of the claim, and the longer the dispute continues, the more acrimonious the relationship can become.

Complaints should be investigated promptly, with a view to mitigating potential harm. And liaison with appropriate authorities should be considered: while a statutory licence or permission will not automatically result in the nuisance-causing activity being lawful, the support of the relevant public authority to one party or the other might be a factor that the court will be willing to take into account when considering issues which go beyond the private rights of the parties.

The above analysis was written by Cassandra Cartwright, associate in our Real Estate group.

Tenancy at will - the Court of Appeal has overturned a High Court decision that a tenant, which remained in occupation of commercial premises after its contracted out lease had expired, did so on the basis of an implied annual periodic tenancy. Instead, says the Court of Appeal, it was a tenancy at will.

Key points

  • The negotiations between the landlord and tenant for a replacement lease were without any urgency or impetus. However, because those negotiations were never actually abandoned, the Court of Appeal was willing to find that the parties always intended that a new lease would actually be entered into.
  • Once the tenant announced an intention to vacate the premises, it was inappropriate for the court to find that a need for security of tenure arose at that point, to cover the period to the tenant's proposed departure date.
  • The continuing nature of the lease negotiations and a joint intention that a new lease be granted - until such time as one of the parties changed their mind - meant that the tenant's occupation was as a tenant at will.
  • This would be the case particularly where it was intended that the new lease itself be contracted out of the Landlord and Tenant Act 1954.

Background

In our November/December 2013 Property Update, we looked at a case where a tenant had remained in occupation of commercial premises after the contractual expiry date of its lease: Barclays Wealth Trustees (Jersey) Limited v Erimus Housing Limited. The lease had been "contracted out" of the Landlord and Tenant Act 1954 (LTA 1954) meaning that the tenant had no statutory right to remain in the premises beyond the lease expiry date.

When it stayed for almost another three years - paying rent to the landlord, and otherwise acting as if there was a lease in place on the same terms and conditions as the lease which had expired - the court was asked to rule on the basis of that occupation.

The High Court judge decided that, out of the all options available to him, the arrangement constituted an implied annual periodic tenancy. He felt that he could not find a tenancy at will nor any form of fixed-term tenancy. Under the common law rules relating to implied periodic tenancies, a minimum of six months' notice must be given in order to terminate an annual tenancy, and that notice must expire on the date that is the end of the relevant "period".

Because of the way various dates fell in the case, the application of those rules meant that the tenant had to give 13 months' notice in order to bring its tenancy to an end. As a result, the tenant was liable for 13 months' rent and service charge etc payments - amounting to some £185,000 - even though it had moved out of the premises a few months earlier.

As mentioned in our January 2014 alert, the tenant appealed.

The Court of Appeal's decision

The first instance decision has been reversed. The Court of Appeal - unlike the judge in the High Court - was willing to find a tenancy at will on the facts.

While the court acknowledged that the negotiations for the replacement lease had continued at a very slow pace indeed, it felt that they were never abandoned. The "obvious and almost overwhelming inference" would be that the parties did not intend to enter into any intermediate arrangement - covering the on-going occupation - which was inconsistent with the aim of the new lease being created. And, because the new lease was to be contracted out of the LTA 1954, why would the parties give the tenant the protection of that Act in relation to the interim arrangement?

The main consequence of the different finding is the fact that a tenancy at will can be ended by either party at any time. Accordingly, when the tenant wanted to leave, it did not have to give a period of notice after all; it could simply up and go. As it was, the tenant actually gave the landlord approximately three months' notice of its departure date, which was entirely acceptable.

Once the tenant had indicated it was vacating the premises, there was no reason to look again at the terms of the on-going arrangement and find - as the first instance judge had done - a point in time when the nature of the tenancy had perhaps changed into one which, itself, attracted the protection of the LTA 1954.

It is not stated in the judgment, but presumably the landlord will have to repay the £185,000 to the tenant if this was paid following the first instance decision, keeping back any money relating to the three months' notice.

Things to consider

As mentioned in our earlier article about this case, it remains best practice to document - correctly, and as soon as possible if not in advance - the basis on which a contracted out tenant remains in occupation of commercial premises.

If the parties intend that the tenant will not benefit from the protections afforded by the LTA 1954, it is vital - from the landlord's point of view - that any tenant who remains in occupation beyond a lease expiry date is there under either a freshly-granted replacement lease which has, itself, been contracted out, or a tenancy at will. Alternatively, the landlord should immediately seek vacant possession in order not to run the risk of a protected periodic tenancy being found - just as it was at first instance in this case.

The above analysis was written by Cassandra Cartwright, associate in our Real Estate group.

CRAR - the "headlines", in anticipation of the introduction of the new rules on 6 April 2014.

In our alerts of June/July 2013 and January 2014, we looked at some of the background to - and issues likely to arise out of - the forthcoming introduction of the commercial rent arrears recovery (CRAR) procedure.

This is just a quick reminder that the new rules are coming into force on 6 April 2014, and that the "headlines" are:

  • It is no longer possible to simply distrain for rent arrears, both in relation to residential premises and commercial.
  • For residential premises, any arrears must be pursued through the courts. However, for commercial premises, there will be the new CRAR procedure which replaces distraint allowing a landlord to pursue a new form of "self-help" remedy.The new procedure requires that seven clear days' warning notice is given to the tenant before an enforcement officer then attends at the premises with a view to taking away goods or requiring the tenant to enter into a controlled goods agreement (which is similar to the old "walking possession"). Clearly the need for advance notice is likely to reduce the effectiveness of the remedy if the tenant's goods are portable.
  • CRAR applies only to commercial premises. It is not available in relation to mixed use premises where, for example, there is a flat above a shop included in the same lease; or a pub which includes residential accommodation for the staff and manager.
  • CRAR may be used only in relation to "pure" rent.

We will do a more detailed piece in due course, once we have had the chance to see how CRAR is working in practice.

Should you have any queries in relation to CRAR, please contact Martin Thomas, head of property litigation and partner in our Real Estate group.

Section 30(1)(c) LTA 1954 - a rare case involving the refusal of a landlord to grant a renewal lease because the relationship between the parties had irretrievably broken down.

Key point

  • A history of litigation, usually instigated by the tenants, against the landlord over 16 years counted as a reason "connected to the user or management of the holding", giving the landlord the ability to refuse to grant a renewal lease.
  • Given that a refusal under ground (c) means that no compensation is payable, it might be a useful device for landlords to use if circumstances permit.

Background

As a general rule, if the requirements of section 23 of the Landlord and Tenant Act 1954 (LTA 1954) are satisfied, and the lease is not otherwise "outside" of the LTA 1954, the tenant of commercial premises has a statutory right to be granted a renewal lease upon expiry of its lease. In the event that the landlord does not grant a renewal lease, the tenant may be entitled to receive compensation from the landlord. Whether this compensation is payable or not will depend upon the reason for the landlord's refusal to grant the new lease.

These reasons - known as "the grounds" - are set out in section 30(1) of the LTA 1954. Litigation involving this section usually relates to ground (f), where the landlord wishes to redevelop the tenant's premises.

The Court of Appeal has had a rare opportunity to consider the meaning of ground (c). This states that "... the tenant ought not to be granted a new tenancy in view of other substantial breaches by him of his obligations under the current tenancy, or for any other reason connected with the tenant's use or management of the holding."

Horne & Meredith Properties Limited v Cox and another

Over the course of some 16 years, the parties had spent hundreds of thousands of pounds in litigation which related mainly to two rights of way and six parking spaces to the rear of a shop in Bridgnorth, near Stoke on Trent. The tenants felt that this on-going litigation was necessary to uphold their legal rights; the landlord felt it was a menace which led to the complete breakdown of the landlord and tenant relationship.

When the term of years granted to the tenant by the lease came to an end, the tenant was entitled to a renewal lease under the LTA 1954. However, the landlord refused on the basis of the second limb of ground (c): "...other reasons connected to the use or management of the holding".

The landlord acknowledged that there were no breaches of any of the covenants of the lease. Rather, it wanted to refuse the renewal lease because of the stream of litigation brought by the tenant. The landlord applied to the local county court, pursuant to section 24 LTA 1954, by way of commencing the lease renewal proceedings.

His Honour Judge Peter Main QC held that the history of litigation between the parties could indeed be a reason for refusing a new lease under the LTA 1954. In his opinion, the "the First Defendant's approach to litigation has grotesquely exceeded any reasonable balance or judgment on his part".

The tenants appealed, but the Court of Appeal has upheld the first instance decision.

"... any other reason"

Lewison LJ, giving the leading judgment, considered whether the second limb of ground (c) should be given a narrow or wide interpretation. His view - relying on the case of Turner & Bell v Searles Ltd - was that the court was entitled to interpret the statute widely. As per the case of Eichner v Midland Bank Executor and Trustee Co, the history of litigation between the parties was something that could be taken into account.

In Eichner there was, in addition to historic litigation, a number of breaches of covenant by the tenant. This meant that both limbs of ground (c) were engaged. Relying on this, the tenants in the present case argued that the court could only consider the second limb of ground (c) if there was also a breach of covenant. However, applying the case of Beard v Williams, the Court of Appeal disagreed. It held that the second limb of ground (c) can stand alone.

Counsel for the tenants also argued that, if the court refused a renewal lease in these circumstances, there was a danger that the floodgates could be opened for landlords to refuse a new tenancy based on any sort of litigation between the parties. Lewison LJ disagreed. The LTA 1954 provides a safety mechanism (which Lewison LJ described as more of a value judgment than a discretion) in the first part of ground (c) in the words "that the tenant ought not to be granted a new lease" (emphasis added). This allows the trial judge - if it is just and equitable in all of the circumstances - to order that a new tenancy will be granted even if ground (c) is otherwise made out.

The "holding"

Lewison LJ considered the term "holding", as referred to in the second limb of ground (c). Was the historic litigation over the rights of way and the parking spaces connected with the "holding"?

Section 23 LTA 1954 defines this as "the property comprised in the tenancy, there being excluded any part thereof which is occupied neither by the tenant nor by a person employed by the tenant and so employed for the purposes of a business by reason of which the tenancy is one to which this Part of this Act applies." Did the rights of way and the right to use the car parking spaces form part of the holding?

Both are incorporeal hereditaments, which means they are not capable of physical occupation.  However, it was decided in the case of Pointon York Group v Poulton that the right to park is a property interest which is capable of occupation in a technical sense.  Similarly, there is the case of Nevill Long & Co v Firmenich which is authority for a right of way constituting "property" for the purposes of section 23 LTA 1954.

Lewison LJ therefore held that both sets of rights formed part of the holding, which meant that all elements of the second limb of ground (c) were found to be made out.

Things to consider

There is no doubt that this was a strange case. Such was the breadth of the previous litigation between the parties - almost always instigated by the tenants - that the relationship between the parties had completely broken down. Even the tenants admitted, while giving evidence, that the litigation would continue if granted a new tenancy.

The Court of Appeal agreed with Lord Denning in Eichner when he said: "It must be considered very carefully whether it is fair to saddle the landlord with a tenant with whom he is in constant litigation". In this case, it was held not to be fair.

That is not to say that other cases, where litigation is a factor, will be decided the same way. However, the case should serve as a useful reminder to landlords of the existence of ground (c). And we have an indication that the court will consider ground (c) widely.

Given that ground (c) carries with it no requirement upon the landlord to pay compensation to the tenant if a new lease is not granted, it must surely be worth landlords considering including it as a ground of opposition in addition to others.

Foreseeable harm - is there a duty on property professionals to take action in order to prevent foreseeable harm in a situation where there is no relationship of proximity between the professional and the party at risk of loss or injury?

Susan Dearden, a partner in our dispute resolution service, has recently considered the Court of Appeal's decision in the case of Harrison & Ors v Technical Sign Co Ltd & Ors: Active Commercial Interiors Ltd (Part 20 Respondent) v Cluttons LLP (Part 20 Appellant).

When a sign fell off a building, seriously injuring passers-by, was any duty of care breached and, if so, to whom was the duty owed, and with whom did the responsibility for that breach lie? Was it the company which had supplied and fitted the sign, the company involved in remodelling the shop front, the occupational tenant who had commissioned the works, or a firm of surveyors who had inspected the works on behalf of the landlord?

Planning - the new Planning Court, revised planning guidance, restated green belt policy, and what constitutes a screening opinion.

The Planning Court

As mentioned in our alert of November/December 2013, a new and specialist Planning Court is being created. It will open for business on 6 April 2014, as part of the High Court. The court will be overseen by a Planning Liaison Judge and will hear planning-related judicial review and statutory challenges, including claims relating to:

  • Planning permissions and other development consents.
  • Enforcement.
  • Applications under the Transport and Works Act 1992.
  • Wayleaves.
  • Highways and other rights of way.
  • Compulsory Purchase Orders.
  • Town and Village Greens.
  • EU environmental legislation and domestic transpositions.
  • National, regional or other planning policy documents, statutory or otherwise.

Any claim relating to such a matter, which is commenced after 6 April 2014, should be issued in the Planning Court. Any claims already underway as at that date will be automatically transferred to the new court.

Revised planning guidance

The government has published its online Planning Practice Guidance (PPG) to sit beside the National Planning Policy Framework (NPPF).

The PPG is divided into 41 categories, each of which is based on a series of questions and answers. Each section contains hyperlinks to the relevant legislation and to other related sections within the PPG.

The government has also published a list of guidance documents which have been cancelled and replaced by the PPG.

Note, however, that some guidance is cancelled for England while being retained for Wales. Also, there are a number of documents appended to circulars which are retained despite the cancellation of the related circular:

  • Annex A to Circular10/95 (Direction relating to demolition) is retained.
  • Appendix A (list of model conditions) to Circular 11/95 is retained.
  • The Consultation Direction appended to Circular 02/09 is retained.

While the new PPG does not contain the bulk of the cancelled guidance, it nevertheless runs to over 600 pages when printed. It appears that the PPG will retain the previous version of each section when it is updated, but it remains to be seen how widely notification of updates will be published. It is obviously easier to update an online resource; it is therefore anticipated that updates and amendments will be made more frequently than previously.

Restatement of application of green belt policy

As with previous green belt policy, paragraph 87 (in Section 9) of the NPPF provides that inappropriate development is, by definition, harmful to the green belt and should not be approved except in "very special circumstances".

By paragraph 89 of the NPPF, local planning authorities are effectively directed to view the construction of any new buildings as "inappropriate development", with some specific exceptions.

In Wood v Secretary of State for Communities and Local Government [2014] EWHC 683 (Admin), the court set out the approach which local planning authorities should use in applying green belt policy as set out in the NPPF. It held that the authority should ask three questions, and carefully consider the answers:

  • Do these circumstances clearly outweigh both the potential harm to the green belt caused by the inappropriate development, and also any other harm?
  • Is inappropriate development proposed?
  • Do very special circumstances exist?

Where each is answered positively, the local planning authority should give "substantial weight" to any harm which would be caused by the development.

What constitutes a screening opinion?

Under The Town and Country Planning (Environmental Impact Assessment) Regulations 2011 (Regulations), a local planning authority may give a screening opinion as to whether an environmental impact assessment will be required in support of a planning application. The authority is required to give a written statement, stating "clearly and precisely" the full reasons for the authority's decision.

In R (on the application of CBRE Lionbrook (General Partners) Limited) v Rugby Borough Council [2014] EWHC 646 (Admin), the claimant alleged that, having adopted a negative screening opinion in relation to proposals to develop a retail park, the Council breached the Regulations in deciding it was not required to adopt a further screening opinion on a revision of the proposals.

The revisions to the original planning application were set out in an email, sent by the developer's planning consultant to the Council. The revisions amounted to a net increase in floorspace, but with no other change to the nature of the proposals. The planning consultant concluded that a further screening opinion was not required and, in an email response, the Council agreed.

The claimant stated that the Council could not rely on the original screening because the revisions to the scheme constituted a different proposal. The court rejected that proposition. The planning agent had not requested a fresh screening opinion and the planning officer's reply did not purport to be a screening opinion. The email was simply the Council's decision that a further screening process was not required for the revised proposals.

The above planning analysis was written by Jan Hebblethwaite, associate in our Real Estate group.


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